As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”
Just in time for Black Friday, we’re pleased to present this timely blog from Danielle Kubes, the blogger behind the Pretty Little Poor Girl blog. You can also find the piece at her site here. Love that slogan: “Because financial literacy is hot.” With Danielle’s permission we’re running it below at the Hub too, and we hope to run more pieces in the future.
Danielle Kubes, Pretty Little Poor Girl
By Danielle Kubes
Special to the Financial Independence Hub
I only really shop three times a year:
▪ August sales
▪ January sales
▪ Black Friday
It’s a waste of money to buy anything any other time a year. I’m allergic to paying full retail-price for anything so I save up all my money to buy clothes and shoes on sale. And almost everything WILL go on sale eventually.
And by sale, I mean REAL sales. Not those “fake sales,” which are popular with American stores like Bath and Body Works, Ann Taylor and Express. Literally every time I walk into their stores there is “30%” off sweaters, Buy 2 body lotions get 2 free etc.,
If there is ALWAYS a sale, that “sale”price is just the TRUE price.
Which I why I wait until there are legit sales, like when they actually want to move merchandise. Those three time periods are the only time that really happens.
Notes
▪Often Black Friday is NOT the cheapest time to buy things, but it can be if you need something before January, like Christmas gifts, or there is something you need/desperately want that you legitimately feel might be gone by January sales
▪ It’s important to figure out whether further discounts will be applied on Boxing Day, or later in January. This comes with a few years experience shopping sales. I suggest writing down the discounts available this year, so you know what to expect more for next year. They are usually quite similar year-to-year
▪ A week before Black Friday there are usually sales. DO NOT FALL FOR THIS.
▪ For example, this week everything at Old Navy is 30% off. But it will be 50% off on Black Friday.
▪ Ask the salespeople what sorts of sales they will be having Black Friday. Some stores in Canada, especially the Canadians one don’t participate. For these sales you’ll have to wait until after boxing day. But American stores do Black Friday amazingly
▪ In Toronto, I’ve noticed recent American imports Express, Ann Taylor/Loft and JCrew can have amazing Black Friday sales. Don’t bother with Artizia. The best time to shop at Aritzia is in late August and late January. GOLDEN TIP
Danielle Kubes is a freelance journalist in Toronto. She believes in abalanced attitude toward financial independence. What would her weekends bewithout brunch? Sad and lonely. But you can also find her hand-washingclothes to save a few bucks at the laundromat.
When Life Bites You in the Wallet, published earlier this year, is an excellent personal finance primer on banking, credit, debt and insolvency, written by a former banker and a bankruptcy trustee.
The bankruptcy trustee, based in British Columbia, is Blair Mantin. The other coauthor is Lee Anne Davies, who I got to know a bit when she worked in Toronto at the senior levels of a major Canadian bank. Lee Anne now lives in British Columbia.
However, in her new career as a health, aging and financial guru, Lee Anne pulls no punches about the wily ways of the industry that once employed her. Continue Reading…
Savers almost everywhere have nearly been beaten into submission by seemingly perpetual Zero Interest Rate Policies (ZIRP) imposed by central banks around the world.
The simple connection is that when interest rates are low, there is no incentive to save money. The flip side is that low interest rates make borrowing cheap, so people raise their debt load. So, is it still worthwhile to save when interest rates are low?
As anyone who believes in “Findependence” well knows, it’s best to torpedo debt as early in life as possible. This starts with student loans and high-interest credit-card debt and proceeds to home mortgages. As the book says more than once, “The foundation of financial independence is a paid-for home.”
This also applies to financing automobiles. I only ever bought a brand-new car once and that was a Dodge Shadow in 1989, purchased for around $10,000 or $12,000. If it was financed it wasn’t for long. Since then, it’s been slightly used cars bought with cash, including my current car, a late-model hybrid Camry that had only 12,000 clicks on it when I liquidated some tech stocks in the spring.
So I can’t speak with authority about the high cost of financing cars. But for those that want to go that route, read a piece in the Financial Post this weekend: The Great Car Bubble. In it, the Post’s resident cheapskate Garry Marr (@dustywallet on Twitter) and Barbara Schecter investigate the explosion in car loans and describe how car loans can soon end up ballooning into debt that exceeds the car’s value. The temptation is for consumers to be enticed by low interest rates and then compound the error by stretching out loan timelines. For example, it cites a case of paying out a total of $55,000 on a car that would cost just $35,000 if purchased for cash outright.
I don’t know about you but I could think of better uses for the $20,000.
Property Pals
While perusing the Post, hop on over to this Personal Finance piece by Melissa Leong about couples going halves to get a foot on the housing ladder. This is called “co-ownership.” You can also see Melissa Leong on video over at the Video Hub at sister site Findependence.TV.
Below we’re pleased to publish the second piece here at the Hub from Sean Cooper, a millennial who really “gets it” when it comes to financial independence. His first contribution was on how he plans to become Findependent, or at least debt and mortgage free, by age 31. The key to this is what the book, Findependence Day, calls “guerrilla frugality.” If the term is new to you, see this primer on the term (as well as “frooger”), which is right below Sean’s article here in the Debt & Frugality section of the Hub.
Sean’s piece is a classic example of guerrilla frugality. Because we all have to eat!
Sean Cooper
Over to the maestro of frugality!:
By Sean Cooper
Special to the Financial Independence Hub
Do you find it challenging to keep your grocery spending on budget? You’re not alone. For most of us, groceries are the second-highest expense after putting a roof over our heads. With temptation down every aisle, it’s easy to let grocery spending spiral out of control.
I’m living proof you can spend less and still enjoy your favourite foods for under $100 a month. I’m able to use the extra money I save towards goals like paying down my mortgage. I know not everyone can live on $100 a month worth of groceries, but maybe my strategies can help reduce your grocery spending a little bit. I’ve found the secret comes down to making wise spending choices.
How I Spend Only $100 a Month on Groceries
Spending $100 a month on groceries is about making specific choices. Instead of going shopping every day, I make a shopping list and go only once a week. Not only does this save time, it helps me avoid impulse purchases. I’ll bring the flyers of other grocers so I can price-match. In a typical shopping week I usually buy only the basics: fruits, vegetables, bread and milk. For under $15 I can get everything I need for the coming week. I’ll only splurge and spend more if I’m running low on something and it’s on sale. For example, if spaghetti sauce is on sale for half price I’ll buy 20 jars — enough to last me until the next sale. As for protein, I stock up on peanut butter and almonds when they’re on sale and never pay full price. I also like to cook for every meal, including breakfast. Instead of buying expensive breakfast cereal, I cook oatmeal. It’s a lot less expensive and more nutritious.
I want to tell you the tale of what I did. I’m not expecting you to become vegetarian, but consider taking a look at some of the changes you can make in your own life.
Evaluate Your Budget
How would you like to buy your everyday grocery items for a lot less? Have you ever considered shopping at discount supermarkets? That’s what I do. The savings can really add up. Shaving $20 off your grocery bill each week will add up to yearly savings of over $1,000. I find discounts grocers often have produce and meat that is just as good in terms of quality as the so-called premium stores. I’m not telling you to stop shopping at your local grocer, but by re-evaluating your budget you can find new ways to save.
Make a Shopping List
To avoid overspending, consider making a shopping list and browsing the flyers for deals on products you’re already planning to buy. I save even more money by price-matching, Many discount grocers match the price of rival stores simply by showing a competitor’s weekly flyer. I show a flyer of the rival grocery store to the cashier and I’m given the lower price. You don’t have to price-match, but just by making a list you’re less likely to overspend.
Consider Cutting Back on Meat
No, that’s not your steak being grilled, it’s your wallet. Sizzling meat prices can really take a bite out of your grocery budget. I’m a vegetarian; instead of eating meat, I get my daily dose of protein from foods like nuts and dairy products. I’m not saying you have to give up strip loin steaks and pork chops, but you might choose to eat meat less often, or buy cuts that are on sale.
Try to Limit Fast Food
I know it can be tempting to pick up fast food on the way home after a long day at the office. We’re all guilty of doing this once in a while. But if you can limit dining out to only once a week, the savings can really add up. By cooking at home instead, you’ll save money and eat healthier, too. Have you ever considered cooking your meals in batches? That’s what I do. I’m not saving you have to give up takeout food, but by eating at home more often you can save a lot.
Consider Buying Items on Sale
If you’re willing to stock up on grocery items you buy every week when they’re on sale, it can add up to big savings. When you see your favourite non-perishable items like canned vegetables and coffee on sale, consider stocking up. By buying enough to tide you over until the next sale you can avoid paying full price. (For some perishables, like meat, and frozen dinners or desserts, a freezer can come in handy if you stock up when the items are on sale: JC.)
Buy in Season
Buying your favourite fruits and vegetables out of season can cost you a bundle. Have you ever seen the price of cherries in January? Yikes! Consider substituting your favourite fruits and vegetables for produce that’s in season. For example, instead of buying watermelons during the winter, I purchase less costly fruits like apples and oranges. If you’re not ready to give up your favourite fruit, you can still save money buying it less frequently – perhaps only once a month instead of every week.
You don’t have to follow my example to the letter, but if you’re willing to make small changes, they can have a big impact on your monthly budget.
Sean Cooper is a Personal Finance Expert and Financial Journalist. He is a first-time homebuyer and landlord who aspires to reach findependence by age 31. Follow him on Twitter @SeanCooperWrite and read his blogs and request his writing services on his website: http://www.seancooperwriter.com/
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